At LendingCrowd, we’re continually looking at ways to improve our platform and make investing with us as easy as possible.
In the third instalment of our investing toolkit, we explain two new account features that we’re launching to ensure that our investors in our Growth Account and Income Account achieve an optimum level of diversification within their portfolios.
Diversification – not putting all your eggs in one basket – is key to mitigating risk, so these features will ensure that investors do not have too much money invested in individual loans.
We designed our AutoBalance feature to ensure that investors have the optimum proportion of funds invested in each loan. This proportion, known as exposure, depends on the value of an investor’s portfolio.
AutoBalance will be automatically enabled for all new and existing investors. It may involve selling holdings in the loans that investors are overly exposed to, and buying holdings where they have too little exposure.
To provide the greatest diversification possible, AutoBalance will reduce the maximum exposure to individual loans. Previously, investors in our Growth Account and Income Account had no more than 5% of their funds invested in any one loan. Our new exposure limits are as follows:
|Portfolio value||Maximum target exposure|
|£5,000 and above||0.5%|
|£2,000 to £4,999||1%|
|£1,000 to £1,999||2%|
To maintain these new exposure levels when investors add funds to their accounts, our platform now has the ability to use the new AutoQueue feature. If a portfolio is already at its target exposure, cash may be “queued” to automatically invest in more loans as they become available on our Loan Market.
AutoQueue, working seamlessly with our AutoBalance feature, will ensure that investors do not have too high a proportion of their funds in any one loan.
LendingCrowd founder and CEO Stuart Lunn said: “LendingCrowd has been at the forefront of innovation in the fintech investing and lending space since we launched almost five years ago. Our proprietary technology, developed in-house at our Edinburgh headquarters, allowed us to become one of the first platforms to offer an Innovative Finance ISA and means we are able to develop and launch additional account features rapidly and efficiently. These enhancements will help our platform manage risk and diversification even better for our investor community.”
Find out more about AutoBalance and AutoQueue in our FAQs.
Please remember that your capital is at risk when lending to businesses. LendingCrowd and its products are not covered by the Financial Services Compensation Scheme.